Overview - Compliances after Incorporation of Company & LLP
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Company & LLP | Artificial Legal Person
A registered Company and LLP is an artificial legal person with certain inherent features, rights, powers and liabilities. Shareholders / Partners are the owners and the Directors / Designated Partners are responsible to ensure the regulatory compliances of Company / LLP. Directors / Designated Partners are required to be aware about the legal and process compliance requirements a registered Company / LLP should follow under various laws from time to time.
Certificate of Incorporation
Certificate of Incorporation is the birth Certificate of Company and LLP. It is the starting point for a series of compliances for a Company and LLP under various legislations in India from time to time.
Ownership and Management of Company
Shareholders/Partners are the owners and Directors / Designated Partners are the guardians, who are responsible for the administration and management of Company/LLP. As the Guardian, Directors / Designated Partners responsible for the actions and inactions of an incorporated entity and are personally responsible to answer the regulatory authorities for any non-compliance of any legal requirements of the entity.
What is after Incorporation?
Post Incorporation Compliance requirements are different for a Private Limited Company and LLP. These compliances can be primarily divided in to following categories:
- Companies Act
- LLP Act
- Accounts & Income Tax
- Labour and Employee related
- Intellectual Property
A. Companies Act
1. Filing Verification of Registered Office (Form INC-22)
If the company was registered with a temporary address while filing SPICe Form INC-32, the details of permanent registered office has to be filed filing of INC-22 for Verification of its Registered Office in Form INC 22 with in 30 days of Company registration.
2. Appointment of First Auditors by Company
The company have to appoint a Chartered Accountant who holds a valid certificate of practice as the First Auditor of Company within thirty days from the date of registration of the company.
3. Infusion of Initial Capital by Subscribers to Memorandum
The subscribers to the Memorandum of Company bring the entire amount of subscribed capital as stated in the Memorandum of Association. Infusion of capital to the Company bank account should happen preferably from the respective shareholders account.
4. Commencement of Business by Company / LLP
Company has to file a declaration of Commencement of Business by Company with the Registrar of Companies that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of such declaration. Company can commence its business operation only after filing this declaration of Commencement of Business with Registrar of Companies.
There is no such restrictions for LLP to start business. LLP can start business immediately after registration.
5. Issue of Share Certificate to the Subscribers of MOA
A limited company has to issue Share Certificates to the subscribers of Memorandum of Association shareholders within 60 days of incorporation. Also, the share certificates must be duly stamped as per the respective State stamp Act and Rules and the Register of Members and other Registers under the Companies Act are also to be updated.
B. LLP Act
The Partners of LLP have to execute an LLP Agreement and a copy has to be filed with the Registrar or Companies in with in 30 days of incorporation of LLP. LLP Agreement has to stamped as per Stamp Act of respective state where the LLP is registered. Delay in filing LLP agreement shall attract penalty of Rs.100.00 per day till the date of fling Form 3 with ROC.
C.Accounts, Income Tax & GST
1. Bank Account in Company/LLP Name
It is necessary to open a Current Account in the name of the Company / LLP with any Bank in India. All the transactions in the name of the company should be transacted through the Company Bank Account only.
2. Books and Accounts of Company
Every business has to maintain the books of account in double entry system of accounting on accrual basis. Bookkeeping and Accounting starts with recording of accounting transactions such as Receipts and Payments. It is advisable to maintain physical records of each transactions through Payment Voucher & Receipt Voucher (Click the link to download formats).
The books of account should be kept at its registered office and can be maintained in electronic mode subject to conditions as per rules.
3. Permanent Account Number (PAN) & Tax Deduction and Collection Account Number (TAN)
Every business is required to have Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) under Income Tax Act.
PAN & TAN will be allotted to a company along with registration. Every LLP has to make a separate application Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN)
4. Goods and Services Tax (GST) Registration
Every business with annual turnover exceeds Rs. 40 lakhs (Service providers 20 lakhs) is required to GST Registration under Goods and Services Tax (GST) Act and Rules. GST Registration can be obtained as and when required.
In case the has to produce its GSTIN to any third parties or authorities for its business, has to obtain the GST Registration immediately after registration of Company.
D. Labour and Employee Related
1. Shop and Establishment Registration
Every Business Establishments are required to obtain Shop and Establishment Registration under respective State Shop and Establishment Act and Rules within 30 days of registration.
This is a state specific mandatory registration for all the business and establishments. The Company has to obtain the Shop and Establishment Registration in every state wherever they have offices and establishments.
2. Professional Tax Registration – Employer & Employee
Employer: Every Business is required to obtain Professional Tax – Employer Registration (Enrolment Certificate) within 30 days of incorporation. This also is a state specific labour registration mandatory for all registered business whether you have any employees or not.
Employee: Every company who employs people with more than the specified limit of salary (this limit varies from State to State) has to obtain Professional Tax – Employee Registration (Registration Certificate. The Directors / Partners who are drawing salary above specified limit also be treated as employees. Also, the employer must deduct the Professional Tax from the salary of employee and pay to the State Govt. on monthly basis.
E. Intellectual Property Rights (IPR)
1. Trademark Registration
Registering a Company or LLP with a name does not provide complete protection to the name or brand name. Protection of Company /LLP name under the Companies Act / LLP Act is limited to the extent that another Company or LLP will not be registered with the same or a closely-resembling name.
Ultimate protection for a business name is secured only by Trademark Registration.
F. Miscellaneous Registrations
1. Start-up India Registration
Start-up India Scheme is a flagship initiative of the Government of India, intended to build a strong eco-system for sustainable economic growth and to generate large scale employment opportunities.
Start-ups registered under Start-up India Scheme are eligible for benefits such as Self-Certification, Tax Exemption (subject to conditions), reduced fee for Trademark and Patent filings etc.
2. MSME Registration
MSME or Micro, Small and Medium Enterprises Registration is also known as Udyog Aadhar Registration. Any business organisation engaged in the manufacture or production of goods or engaged in any service can be registered as a MSME.
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Post Incorporation Compliances - Requirements
Filing Verification of Registered Office (Form INC-22)
Appointment of First Auditors by Company
Issue of Share Certificate to the Subscribers of MOA
Commencement of Business by Company
Books and Accounts of Company
Permanent Account Number (PAN) & Tax Deduction and Collection Account Number (TAN)
Goods and Services Tax (GST) Registration
Shop and Establishment Registration
Professional Tax Registration – Employer & Employee
Steps after Incorporation of Company - LLP
Asses the immediate Requirements
Need to do analysis of business plans and size of operation and areas where the business is going to be started
Check the steps already taken and What is left
Every Company / LLP must have taken certain steps at the time of registration. However, the initial steps may or may not be sufficient to cater all the requirements. It is advisable to do thorough legal health check to assess if any thing is left.
Take timely steps
It is advisable to take timely steps to complete the identified requirements.
Certificate of Incorporation - Company / LLP
Electronic copy of Certificate of Incorporation of Company or LLP. There will be no physical certificate issued by ROC office with seal or signature.
Company / LLP Registration Documents
Company /LLP Registration Documents filed with ROC such as Memorandum of Association, Articles of Association, FiLLip Form, Subscription Sheet, Consent of Partners, Other docs filed with ROC
KYC Docs for Directors and Designated Partners
KYC Docs (Identify and Address Proof) of Directors and Designated Partners such as PAN, Aadhaar, Passport, Driving Licence etc.. and couple of photos to be kept ready.
KYC Docs for Shareholders and Partners
In some cases, KYC Docs (Identify and Address Proof) of Shareholders and Partners may also be required. So, documents such as PAN, Aadhaar, Passport, Driving Licence to be kept ready.
Address Proof of Registered Office
Requirements for address proof of registered office may vary depends on situation. In some cases, a copy of utility bill and NOC from the owner may be sufficient. In some cases, rental agreement is mandatory.
Do business with Peace of Mind
Promoter and Directors are worried about the complex legal and regulatory compliances that a startup company or LLP to follow.
Little understanding of basic legal requirements and simple steps for timely compliance will ensure peace of mind to the promoters to carry real business rather than loosing time and money in the business of compliance.